Such as extra XP, better loot, etc? Just got the game and currently patching and was wondering how the difficulty system in this game worked. Also, does content difficulty scale with group size? For example, if I'm doing a mission and another player joins, does the difficulty increase?
Typically, the more players in a mission, the more enemies there are to fight. This naturally gives you more experience and more chances at loot.
If you are referring to the difficulty setting for missions, I can say based purely off my own observations that you get more experience for killing enemies and have a significantly higher chance at rarer items on elite difficulty over normal.
Edit: As you are a new player, I'll quickly explain the difficulty setting. You are able to increase the difficulty of missions you play. The three difficulty settings are Normal, Advanced and Elite. I don't have the forum post offhand which gives you the exact number boosts to experience and rare item drop chance, but it isn't trivial. However, advanced and elite difficulty modes bring minorish death penalties and enemies that start to become significant threats to your survival.
Sometimes you get a little better loot, but it's not guaranteed to really be better. Most people just play higher difficulty for the fun of it, and for getting to deal with the damage system. As for grouping, difficulty doesn't increase if they join your mission, but if you join their mission they might be set at a higher level then you; or you higher then them. Ultimately teaming just means more foes of whatever level the leader is set, and thus more XP for everyone.
Yes, you get better loot drops when playing at higher difficulty. As for skill points etc, afaik your overall mission reward will not increase, but you'll get slightly more points for every enemy you defeat.
Many missions also scale with group size, but this will only give an increased number of enemies, not raise the difficulty level (make enemies tougher).
Higher difficulty settings give higher rates of quality drops. I don't think the actual drop rate is higher, but if it does drop, there is a higher chance of it being uncommon, rare, etc. I don't know the exact numbers but I believe that on elite, there is 30X better chance of dropping a very rare versus on normal setting. But keep in mind that it is still a very small chance (30x 0.0001 is 0.003).
Also, the difficulty doesn't actually increase in the lower levels, so when you first start out, it will not seem difficult at all. I don't think it actually makes a difference until level 8 or so. It is also a little imbalanced between space and ground. Elite in space is manageable, but elite on the ground is much harder.
The difficulty does scale for the number of players on your team for most missions. The difficulty ramps up mostly be increasing the number of NPC's you have to fight. Doing a mission solo, you will be fighting between 1 and 3 NPCs at a time. With a full team, you may be fighting between 5-15 NPC's.